Gordon Brown has brought together a council of senior business figures to advise him on how to make Britain a better place to do business, but has angered small business leaders who feel that their voice is not being heard by the government.

The Business Council for Britain, which will meet two or three times a year, counts among its members the star of The Apprentice, Sir Alan Sugar, and the Tesco chief executive, Sir Terry Leahy. They will be joined by Arun Sarin, the chief executive of Vodafone, Sir John Rose, chief executive of the aircraft engine-maker Rolls-Royce, and Stephen Green, chairman of HSBC. It is expected to be chaired by Mervyn Davies, who is chairman of Standard Chartered bank and also a board member at Tesco.

Most controversial is Mr Brown's decision to pick Damon Buffini, the founder of Permira, which alongside fellow private equity firm CVC bought the AA three years ago. That deal, and the subsequentcost-cutting exercise that saw 2,800 workers lose their jobs, sparked a debate about private equity that resulted in Mr Buffini's recent appearance before MPs.

Many union leaders accuse private equity firms of asset-stripping companies for personal gain, sacking workers and cutting off pensioners. They are incensed that private equity bosses earn huge bonuses while taking advantage of special tax breaks introduced by Mr Brown. Favourable tax laws designed to help entrepreneurs get started mean private equity figures can pay as little as 5% tax while their low-paid staff contribute at least four times that rate.

Mr Buffini's appointment is being seen in the City as a message that the industry should have a voice in government, although a deal needs to be done over the tax breaks private equity enjoys.

Council members can be called on by the prime minister outside the scheduled meetings for advice on specific matters but the decision to include only leading businesses has outraged small business leaders, who fear their voice is not being heard despite employing many more people than multinationals. The last budget saw the starting rate of corporation tax increased to 22% from 19%, which hit small businesses hard and did little to dispel their suspicions.

"It is all well and good for the likes of Tony Blair and now Gordon Brown to dine with people like Sir Terry Leahy but how do small businesses make their opinions heard?" said a spokesman for the Forum of Private Business, which represents 25,000 businesses. "How do they get to bend the ear of the prime minister?"

Mr Brown's new council is an extension of the international business advisory council he announced in March last year. That group met only once.

Sir Terry Leahy, 51, runs Britain's largest retailer, Tesco, one of the most dominant grocers in the world. The son of a greyhound trainer, from Irish stock, he was the youngest of four brothers raised on a Liverpool council estate. He had a summer job stacking shelves at Tesco, but his first job out of college was as a Co-op management trainee.

He quit in 1979 to follow his girlfriend to London, where he took a job with Tesco. Quickly talent-spotted, he joined a handful of managers credited with helping the supermarket group overtake Sainsbury's as the UK's No 1 in 1995. Since taking the top job 10 years ago, the keen Everton fan has set his sights on winning even more business from the high street.

He has also taken Tesco overseas, with stores in more than 11 countries from Turkey to Thailand. The empire's stock market value has risen from £4bn to £35bn, with profits exceeding £2bn.

Damon Buffini, 44, founded private investment house Permira in 2001. He remained low-profile until the GMB parked a camel outside his church in south London, alluding to the improbability of a rich man entering the kingdom of heaven - a response to Permira's role at the AA, where 3,000 staff had lost their jobs.

Once an accomplished sportsman, he studied at Cambridge and Harvard Business School. An avid Arsenal fan, he was raised by his mother on a Leicester council estate. He is one of the few private equity figures to meet union leaders, though he has done little to dampen mistrust.

Permira, which operates funds totalling €22bn (£15bn), has brought its debt-heavy investment model to a string of British firms including New Look, Birds Eye and Travelodge. He is thought to have amassed a personal fortune of £100m.

Sir Alan Sugar, 60, is perhaps Britain's best-known entrepreneur. He left school at 16, and after a shortlived spell as a civil service statistician, set up Amstrad (the name stands for Alan Michael Sugar Trading), making low-priced hi-fi systems. The Essex-based business took off, making phones and computers - with an emphasis on affordability. He has an estimated fortune of £790m.

Once a firm Thatcherite, East End-raised Sir Alan made donations to New Labour in the late 90s. Always outspoken, he gained a public profile as chairman and major shareholder at Tottenham Hotspur, roles he has since relinquished. But it was the BBC's version of The Apprentice, and its catchphrase "You're fired", that made hhim a household name. His Viglen business, meanwhile, has large public sector contracts.